ELX.L Regulatory News (ELX)

EL ORO LTD 28 February 2017

Interim Results

El Oro Ltd announces its interim results for the six months ended 31 December 2016.

The interim results for the six months ended 31 December 2016 will be posted to shareholders and will be available shortly on the Company's website www.eloro.com.

Extracts from the interim results are set out below.

For further information, please contact:

Aztec Financial Services (Guernsey) Limited

Chris Copperwaite

Tel: 01481 748 831

El Oro Limited

Robin Woodbine Parish, Chairman

Una Ni Dhonaill

Tel: 020 7581 2782

EL ORO LTD

CHAIRMAN'S STATEMENT

Interim Report as at 31 December 2016

The El Oro Group's profit before taxation for the six month period ended 31 December 2016 was £5,132,080 (loss before taxation for the six months ended 31 December 2015: £3,875,771). The Group's net assets at 31 December 2016 were £53,708,984 or 84.6p per share (net assets at 31 December 2015: £46,971,653 or 73.3p per share).

El Oro Limited's share price as at 31 December 2016 was 65p (share price at 31 December 2015: 50p); a 30% increase. This compares to a 12% increase in the FTSE All Share index and an 11% increase in the FTSE Small Cap index over the same period.

The welcome relief evinced by these figures is akin to that experienced by a swimmer emerging from a dive into very cold water; albeit in our case the immersion has continued for 4 frigid years. We cannot help but be heartened by the emergence of abundant clumps of aconites and snowdrops, indicating the demise of Winter and proximity of Spring whilst the S & P, Dow and FTSE indexes gain previously unattained altitude.

The recovery that began primarily in Commodities' markets in February last year, found new fervour in Sterling terms after Brexit; the triumph of Donald Trump and the realisation that China was not on the point of imminent collapse placed a new plateau beneath copper, coal and iron ore; more recently the scatter-gun technique of the new US President insulting all and sundry, and the quirkiness of the Korean President have re-ignited demand for Gold, aided by the outlook for inflation. In respect of his apparent antagonism to the mores of today, we very much hope he implements Lee Kuan Yew's principle: 'I try to be correct, not politically correct'.

Coal, long the pariah of the energy world has been re-included in the confines of acceptable conversation, as President Trump changes course from worshipping at the altar of the Climate Change consensus to what may be established as a healthy scepticism. The saga of falsified figures on global warming begins to unfold publicly, and the disadvantages of burning wood become more obvious, just as Drax completes its conversion from coal to imported Wood chip. The woes of Toshiba, brought to its knees by Nuclear Power plant cost-overruns in the United States, highlight the dangers of private sector involvement in that intensely regulated industry; the warning lights are flashing for Hinkley Point.

It appears ever more perverse that in the light of the relentlessly-burgeoning deficit, the 2 great White elephants of our age, HS2 and Hinkley Point, should seem to be sailing serenely forward; the lesson of the egregious subsidies provided in Northern Ireland, and consequent fall of its Government have obviously escaped attention in the corridors of power; at the same time, the expected revenue from Stamp Duty has fallen sharply, as a result of the punitive increases imposed by the previous Chancellor: enormous harm has been done to the whole assembly of Estate Agents, property owners, developers and the entire Property sector. It has also exacerbated the hollowing-out of Central London, into an enclave of non-Doms, and Middle-Eastern hubbly-bubbly smokers, with even the Knightsbridge Barracks in all its modernist monstrosity, apparently destined for a similar fate. The sacrifice of Sefton and his Guardsmen will soon be extinguished by the swish of the Maybach limos, their passengers cowering behind their darkened windows.

It is quite possible that the long period of deflation endured by Commodity producers, whilst enjoyed by consumers, is drawing to a close. Certainly, indications within the UK are for higher levels of Inflation, as a result of the fall in Sterling, and interest rates in the US would also appear to be on a higher trajectory.

In respect of our own portfolio, despite its fairly swift failure to achieve sufficient acceptances, the KLK offer for our holding in M.P. Evans has raised that company to a new price level, which has been maintained and enhanced by the recent purchases undertaken by KLK in the market.

Whilst still well short of the estimate of value provided by M.P. Evans during the attempted takeover, we are pleased to see that it underpins their valuation, whilst reinforcing the tenacious stewardship of the company that the management has displayed over many years. This can but reflect positively on our other holdings in the sector, underpinned by a firmer Palm Oil price, amidst burgeoning demand in Asia. We do believe that it underscores the durability and inherent value of many of the larger positions in the portfolio.

We were also the beneficiaries in the Autumn of a bid, firstly from Ancala and subsequently from Severn Trent for our holdings in Dee Valley Water Company, again held for a considerable length of time. Due to a nuance of the articles, whereby a majority of shareholdings had to vote in favour, this had to be resolved by a hearing in Court, and has only in the past few weeks been sanctioned to go ahead. Whilst we will regret the loss of our steady and unimpeachable dividend paid consistently by a fine company, we will use the proceeds to reduce the outstanding debt.

Many of our long-term holdings have also advanced to new or near previous highs, including James Halstead, Young & Co, Renishaw, Fulcrum Utility, Royal Dutch Shell, British American Tobacco and Porvair, to mention a few. Herald Investment Trust with its loyal commitments to Apple amongst other technology triumphs, continues to enhance the reputation of its manager, Katie Potts.

Hurricane Energy, enhanced by stellar drill results and greater optimism in the oil sector has made further advances since the full-year, and may have more to come. Some more recent holdings, such as Burford Capital and Bowleven have also made further progress.

Less encouraging has been the debacle over Troy, which fell hard after an injudicious share sale during its close period following a rights' issue and the subsequently announced pit-wall collapse. The reliance on a single mine in an Equatorial area subject to consistently heavy rain stands as a severe rebuke to our failure to take more profits when they were available. It will be a long haul back to credibility, but the Reserves of 300,000 ounces, still remaining despite 9 months' mining, gives us a shred of comfort.

Elsewhere in the Mining sector, Endeavour Mining , B2 Gold, and Nevsun, the latter enhanced by its takeover of Reservoir Minerals' huge copper deposit in Serbia, amongst others, continue to show promise: it is possible that the sunshine in South Africa excessively enthuses one's judgment at the recent Mining conferences in and around Cape Town, but a more charitable view is that the worst has passed in the Mining Sector, and a more favourable era has resumed for carefully selected stocks. The same might also be true for the Lithium sector, where various car companies, not least Volkswagen, now seeking to make amends for its 'Defeat Devices' on its diesel cars, are making public their commitment to Electric cars.

On the home front, the Battle over Brexit has now moved into the parliamentary arena, whilst the nay-sayers and gloom merchants continue their sniping from the side lines. Europe itself faces its days of destiny, with elections on the horizon in France and the Netherlands, as well as Italy, each with its own brand of maverick politicians, any one of whom could upset the cosy Socialist consensus that has embroiled its constituent parts for 50 years or more.

Greece's ejection or departure from the Euro looms ever closer, perhaps to be followed by Italy. Either event, however unlikely, must now be considered feasible, in the light of events on both sides of the Atlantic. Undoubtedly such uncertainty seems to bode well for holders of precious metals, whilst Britain's new trajectory towards more vibrant and populous economies of Asia, Australasia and the Americas will in due course bring it far greater prosperity than sticking with the failed system of dogmatic and authoritarian socialism that the E.U represents.

It is to be hoped that President Trump's more pragmatic and sanguine approach towards relations with Russia will not be thwarted by the nostalgic yearning for the old certainties of the Cold War: the malevolence of the East Coast Press (even when exacerbated by the new President's outbursts) and the interests of the Military-Industrial complex, combined with a long history of antagonism to the old USSR, will be formidable opponents to the recognition of Russia, whatever its internal failings, as our foremost ally in defeating the rise of Militant Islam.

In Britain, huge challenges face the new Conservative administration, where the NHS remains embedded in excess expenditure and severe management challenges; Defence has been impaired and emasculated, resulting in loss of morale and lack of reliable equipment, and Education stutters forward, hampered by modern thinking on providing 'safe spaces' where students can retreat from being challenged on ideas alien to their customary thinking; and the suspicion is entrenched that able students are being passed over for admission to University in favour of those with 'potential' from more deprived backgrounds.

More pertinent to the Fund Management sector, endless new regulations are imposed, tying able fund managers in ever more complex knots from which even Houdini would find it difficult to escape. The same applies to the Banking sector, and it will be instructive to see how much of the recent regulatory regime in the States survives President Trump's intended reforms.

The Housing sector in the UK, often accused of 'hoarding' land to enhance prices, has recently rebuffed such charges, pointing out the time taken to secure full planning permission on even the simplest building plots. President Reagan's maxim that the Government Is the Problem, rings ever truer.

The current imbroglio over the Rating Reviews, which threatens especially our beloved Pub sector with an enormous rise in costs, highlights a taxation structure ill-suited to today's internet era: it would be perverse if those Clubs, Charities, and old-era businesses were to be driven out of existence because of their location in South-East England, whilst the On-line Giants continue their charmed existence safe in the ether of their tax-free zones. The increasing burden of the Living wage likewise threatens real businesses employing actual people, foremost amongst which is the hospitality sector. In addition, direct taxation remains excessive, still bordering on 50%, as well as complex, and remains overdue for simplification and reduction.

We are confident that our larger investments in the hospitality sector will continue to thrive, but many on the margin will be seriously threatened and it is to be hoped that the current Chancellor will be more sensitive to the potential damage than his predecessor proved to be and prompter in ameliorating the threats.

Looking to the Future, Shareholders will be aware that a Special Resolution was passed at the 2016 AGM, to put your company into liquidation after the 2018 AGM, UNLESS a vote to continue is passed prior to that date.

Whilst there may well be many who would welcome the bird in the hand, it was also apparent at that AGM that a sizeable number do not regard that route as liable to bring best value to shareholders, not least due to the comparatively illiquid nature of many of your Company's larger holdings.

Your Board is in the meantime, looking at whatever other options are available to it, and remains cognisant of the discount prevailing over the current share price. This has in the past proved attractive for new arrivals, and undoubtedly continues to be so, even if of remorse to long-term holders.

It is my personal belief that a continuation would prove to more advantageous in the longer-term, as we move closer to our no-debt position and with fewer but larger holdings, many established in promising and consistently successful areas.

I am sure the Directors will mull over these matters with their usual panache, and choose a path that will bring benefit to us all.

In recent weeks, we mourn the passing of Sarah Nops, a loyal shareholder and doyenne of the Cooking world, whose delicious and sustaining food has graced many Annual Meetings. We treasure her memory and the example she set of honest endeavour, tremendous but unsung talent and stoical disregard of her own suffering.

We also mourn the recent death of Mr.Gwyther, Cobbler, hotelier, farmer and businessman extraordinaire of Bishop's Castle, who epitomised so many of the virtues of hard work and mastery of his own craft: having helped revitalise and re-develop Bishop's Castle in the 60s,he never forewent his craft of cobbling, repairing shoes for 4 generations of my family. His essential common sense and aptitude have been a guiding-light to us for more than half a century.

Psalm XXIV v 6: For by wise Counsel thou shalt make thy war, and in the multitude of counsellors there is safety.

As we step forward on more solid ground, I would like to express my thanks to the splendid team in Cheval Place, Una, Abbie, Nick and Nancy, as well as Chris Copperwaite and his colleagues in Guernsey for their support and unflagging efforts during some trying times. As the songster Johnny Nash wrote 'I can see clearly now, the rain has gone, I can see all obstacles in my way'.

More obstacles can certainly be expected, but we are now in a far better position from which to deal with them, and have a greater degree of confidence that shareholders will benefit from staying on board for the journey ahead.

Robin Woodbine Parish

28 February 2017

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (Unaudited)

for the six months ended 31 December

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Unaudited)

for the six months ended 31 December

CONSOLIDATED STATEMENT OF FINANCIAL POSITION (Unaudited)

As at 31 December

CONSOLIDATED STATEMENT OF CASH FLOW (Unaudited)

For the six months ended 31 December

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